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UK First Time Buyer Mortgages
A first time buyer mortgage is a specialised mortgage product developed with a range of features to appeal to individuals and couples who are seeking their first step on the housing ladder.
First time buyer mortage products have been developed to take into account the specific needs of buyers who may have no equity from the sale of previous properties, little or no deposit or little spare cash for legal, moving or furnishing and decoration.
As a consequence of these particular characteristics of many, if not most first time buyers, a first time buyer mortgage may have one or more of the following characteristics.
The interest rate charged may start at a discount to the standard variable rate.
The discount to the standard variable rate may be for a fixed term of one or two or more years, as agreed at the commencement of the mortgage period.
The mortgage product may include a 'cashback' sum. This is a sum of money given to the mortgage holders at the commencement of the mortgage. This may be a fixed sum or a sum that will vary depending on the size of the mortgage. The mortgagee is free to spend this on any moving costs incurred.
There may be no requirement for an initial deposit. This is called a 100% mortgage.
There may be other incentives such as reduction on other financial products.
Mortgage providers will be particularly attracted to the first time buyer mortgage market. There are many reasons why this might be the case. However, perhaps the most important one is that those seeking a first time buyer mortgage are likely to be younger than most mortgage buyers, and mortgage providers hope that they will remain with the provider longer than mortgage customers who become customers when they were older. Like all mortgage products, your home is at risk if you are unable to maintain the payments on your first time buyer mortgage.
Clearly, all first time buyer mortgage deals should be scrutinised closely to determine the sum involved and compared with other deals across the market. Only take advice from a qualified financial advisor and remember that only an independent financial adviser is able to advise on products from the widest range of mortgage providers.
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